February 20, 2013

There has been a lot of talk in the community about transit-oriented development (TOD) and its supposed benefits (whichIcontest). If you want to hear about these supposed benefits, a second round of public meetings regarding future Saint Louis TOD projects are scheduled over the next week.

Citizens for Modern Transit recently hosted a luncheon with national TOD expert Dena Belzer on the Economics of Building Around Light Rail. I had an opportunity to review her Powerpoint presentation, which did not convince me of any such economic benefit.

Granted, I have to hedge my comments with the fact that I did not physically attend the presentation. That being said, the most outrageous trend running throughout the presentation is that TOD will save money. It will save money for the government, it will save money for households, employees, employers — pretty much everybody.

The presentation suggests that compact development helps municipalities save money. Just like you save money at Jos. A. Banks buying two suits to get the third one free, when you did not even need a suit. Spending money just to get a “good deal” is not always a good justification for spending that money.

And what about households? Belzer’s presentation suggests that TOD can save households billions of dollars and that money can be reinvested in the community. First of all, TOD will not save us money when we are paying for it in our taxes.

Secondly, she cites figures that suggest Portland’s transit policies save residents $2.6 billion per year. However, more than half of that imaginary figure comes from the estimated value of commute time that has been reduced due to transit options — the opportunity cost. I do not know about you, but I have not found a way to manufacture gold coins from the time I save on days that traffic is light. Nor do I mind my commute to work. Many people choose to spend more time commuting in favor of lower housing costs, community preference, or a variety of other factors.

Other people prefer to use transit or live near a Metro stop and enjoy a predictable commute. There is nothing wrong with that. However, it is not a sufficient reason to compel all taxpayers to subsidize housing, retail, and office facilities around transit stops so that planners can impose their views on the rest of us.

I fully agree. The same can be said of how we calculate benefit of a concert or sports team. The figure is add up every dollar spent and then times it by 7 to show the benefit to the community. Problem is, the original figure fails to account for how much of the original amount would have been spent in the community if there were no concert or sports team. Don’t people go to alternate activities that are in the community or do they just pile the money up wishing for a concert or a sports team?

Opportunity cost is hard to calculate. The same argument can be made in reverse. I see no benefit in subsidizing roads into the suburbs so that people can live 50 miles from where they work. An effective argument could be made that it is more beneficial to building mass transit and subsidize around that, than subsidizing road building which will serve a smaller population of people. I am not saying you are wrong, just that it is very hard to calculate the costs and benefits.

phil, on the one hand you make a good point: it is not obvious which is better to subsidize, roads or rails. But let us not limit ourselves to this false dichotomy and instead discuss whether any subsidy at all is worthwhile on its own merits. Based on this, rail subsidies are a losing proposition.